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Integrity Legal

Archive for the ‘Thailand Business’ Category

4th June 2016

In recent weeks the Bangkok Post has reported on a great many changes that are currently being undertaken by officials in the Thai government. In fact, it appears that the judicial system in Thailand has been the subject of rather drastic reform in recent years. To quote directly from an article posted on the Bangkok Post official website on May 18th:

Up to 35 laws concerning judicial affairs have been amended over the past two years…Of the 35 laws amended in the past two years, 11 have come into effect, he said. They are the land transport act; the bankruptcy act, the act on prevention and suppression of terrorism financing; the the anti-money laundering act; the justice fund act; the ministerial, departmental, and divisional improvement act; the act on amendments of the Civil Procedure Code. Also on the list are the act on the procedure of suspect detentions under the 1963 and the 2016 versions of the Criminal Code…

The reforms noted above have only been implemented relatively recently so it may take some time before the effects of these measures can be readily ascertained. At the same time, measures have been put in place in an attempt to thwart transnational criminals in the form of protocol changes regarding the sharing of information regarding criminal matters arising in Thailand. It also appears that new measures have been promulgated in an effort to curb corruption. Apparently, the Public Sector Anti-Corruption Commission is poised to begin more assiduous corruption suppression initiatives.

The judiciary is not the only sector seeing reform initiatives recently. The tax authorities appear to be taking measures to make the Thai tax system more equitable, especially for those employed by Thai companies operating outside of Thailand. To quote from an article from the aforementioned website from May 23rd:

The Finance Ministry is poised to adjust the personal income tax system for Thais working abroad and foreigners who work here to create fairness and attract foreign direct investment…According to the Revenue Code, employees working for companies incorporated in Thailand are subject to personal income tax regardless of where they work…The way Thailand charges personal income tax is based on where employers have been set up rather than the source of income as in other countries…Thailand’s taxation of personal income is not fair and needs to be adjusted…

It appears that the Permanent Secretary plans to propose an amendment to the Revenue code to address the currently perceived unfairness in the Revenue Code. How such a proposed amendment will ultimately fare remains to be seen, but should the amendment be adopted it would be beneficial for some employees of corporations incorporated in Thailand.

In light of these stories it is interesting that the Deputy Prime Minister of Thailand has noted Thailand’s readiness to join the Trans-Pacific Partnership (also known as the TPP). For those unaware, the TPP is a trade agreement composed of 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam). Other nations have expressed interest in joining the TPP in recent years. To quote the Bangkok Post article on this issue from June 1st:

Mr Somkid said Prime Minister Prayut Chan-o-cha has confirmed the country’s readiness to join the TPP, and a committee chaired by Commerce Minister Apiradi Tantraporn has been set up to prepare for the move…”Thailand cannot afford to be complacent. We can take lessons from other member countries. At this point, we are ready to join the TPP. It depends on when they will accept us…”

Clearly, officials in the Thai government seem enthusiastic about the prospect of joining the TPP. However, the article goes on to note that measures are being taken to assess the ramifications of Thailand becoming a TPP member. It was also noted that Thailand would monitor the effect the TPP has had on other countries prior to making firm commitments to join the TPP. It seems likely that analysis of the experiences of Vietnam, Malaysia, and Singapore within the TPP framework will be utilized in order to better determine Thailand’s official petition to join the trade bloc and the timing thereof.

Thailand is clearly taking steps on many fronts to bring governance and regulations into line with global standards. When and how these efforts will bear fruit remains to be seen, but it is definitely an interesting time for students of Thai legal and regulatory matters.

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2nd February 2016

In a recent article in the Bangkok Post it was noted that the Prime Minister of Thailand is poised to travel to the United States to attend a summit between the United States of America and the Association of Southeast Asian Nations (ASEAN):

[H]e will join Asean leaders attending the first stand-alone US-Asean summit in the United States on Feb 15-16 in response to US President Barack Obama’s invitation… The meeting was called when Asean and the US upgraded their level of cooperation from dialogue partner to strategic partner in November last year…

This news comes upon the heels of a recent study which found that Thailand has major issues with skilled labor when compared to other jurisdictions in the region. To quote directly from The Nation newspaper:

According to the World Bank (WB), Thailand will face the biggest shortage of skilled labour in the Asean region…Yongyud Wongpiromsarn, director of the committee on education reform, said area-based education was key to redesigning the education system so it meets local demands…

Although it would appear that education reform remains key to creating more appropriately skilled labor in the Thai market, Thai officials also seem to be implementing legislation in order to improve the overall competitiveness of the Thai business sector. To quote from another article in the Bangkok Post:

The cabinet yesterday approved the draft amendments to the Trade Competition Act aimed at enhancing competition and reducing business monopolies and political meddling…

Notwithstanding the fact that Thailand has competitiveness issues it seems to this blogger that the current moment may be an auspicious time to invest or start a new business venture in the Kingdom. Although many news outlets have covered the fact that Thailand has been dealing with political and economic hurdles in recent years, this blogger’s opinion is that Thailand remains one of the best places to conduct business in Southeast Asia. While other countries may have more room for growth, Thailand has the advantage of substantial infrastructure and  can act as a corporate headquarters for a regional operation which could encompass places like: Laos, Myanmar, Cambodia, and even Malaysia or Vietnam. Meanwhile, Bangkok may soon be the entrepot for overland trade between China and the other ASEAN nations. This seems especially likely in light of the fact that a high speed rail system will be put in place linking China, Laos, and Thailand by rail. Bangkok appears set to act as the focal point for the exchange of goods and services between all of ASEAN and Southern China.

Clearly, Thailand has obstacles to overcome economically, but it would be unwise to discount Thailand as a place to do business, especially as getting into this market presently could compound later economic benefits.

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5th November 2015

During the month of October 2015, it came to this blogger’s attention that the Thai government began to heavily enforce regulations against those overstaying their Thai visa and those utilizing nominees in order to control companies in Thailand. In a recent article on the Khaosod English website it was noted that more than 9000 people were arrested and detained pending deportation for overstaying their visas. The article went on to note:

The penalties announced Sunday are identical to regulations announced by the immigration bureau last year that have been in effect since Aug. 17, 2014. Foreign nationals who remain in the country more than 90 days after their visa expires are to be banned for one year. Those who overstay for one year, three years or five years are forbidden from re-entering the country for three years, five years and 10 years respectively. If they don’t turn themselves in and are instead caught by police, those who have overstayed less than a year would be blacklisted for five years while those with over a year face a 10-year ban…

The penalties referred to above were apparently applied to those detained in the aforementioned roundup and it would appear that such measures are likely to be applied to overstayers in the future. For this reason it is strongly recommended that those wishing to stay in Thailand obtain a visa and leave within the specified period of validity unless a Thai visa extension is obtained. There are many types of Thai visa categories including business visas, retirement visas, O visas for family members of Thai nationals, and the greatly anticipated long stay tourist visa which is set to begin being issued in mid-November.

Meanwhile, Thai officials in the Ministry of Commerce seem to be implementing stricter enforcement of rules regarding the use of nominee shareholders in Thai companies. Under the Foreign Business Act, foreign nationals are not permitted to use Thai nominee shareholders in order to circumvent the restrictions on foreign ownership of Thai companies. Those caught violating this law can face fines or possible imprisonment. Apparently, officials with the Department of Business Development will be investigating certain companies to determine if nominees are in use. To quote directly from The Nation:

The 10 sectors to be inspected are food and beverage, tourism, property rental, the property trade, car rental, spa, handicraft and souvenir retail, Internet retailing, direct sales, and education consultants. Chainarong said that those sectors would be targeted because it was believed that a high proportion of their businesses were foreign controlled through the use of Thai nominees…

Clearly Thai regulators are becoming increasingly serious regarding the enforcement of Thai law in both the realm of immigration and business. It should be noted that American Citizens are permitted to own 100% of certain types of Thai corporations pursuant to the provisions of the US-Thai Treaty of Amity.

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20th September 2015

In a recent article in the Bangkok Post it was reported that the current government in Thailand is taking measures to foster growth for small to medium sized enterprises (SMEs) in Thailand. It would appear that the present government is eager to provide encouragement for small and medium sized businesses in Thailand. Furthermore it seems as though Thai officials are attempting to position the country as a location of choice for small business start-ups within the greater framework of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community (AEC). However, of particular interest to this blogger was the mention of possible rule changes with regard to Thai corporate regulations pertaining to Thai Company registration and the shareholdings thereof. To quote the aforementioned article directly:

Mr Pongpun said the authorities were improving regulations on the incorporation of private companies to allow the incorporation of a juristic person registered by only one person.

At present, corporations (also referred to as juristic persons) in Thailand must have a minimum of three (3) shareholders in order to incorporate under Thai law. It should be noted that prior to an amendment to Thai corporate law at approximately the turn of the century it was required that all companies registered in Thailand have a minimum of 7 shareholders in order to incorporate pursuant to Thai law. Many at the time felt that the 7 shareholders requirement was too cumbersome and for that reason the statutorily required number of shareholders was reduced to 3. Since then, there have been those who have noted their belief that allowing Thai corporate structures with only one shareholder would bring Thai corporate law more in line with similar bodies of law globally. For example, in many American jurisdictions Limited Liability Companies or LLCs are only required to have one member/shareholder, while similar Limited Company (Ltd.) structures are allowed in Britain and the Commonwealth nations and many European jurisdictions allow for similar corporate structures as well.

It remains to be seen whether Thai corporate law will be amended to allow for single shareholder corporations in Thailand. It is a good sign that such structures are being considered by Thai officials especially since such structures would be especially beneficial to small business owners in Thailand. Of special note to American readers, pursuant to the provisions of the US-Thai Treaty of Amity it is possible for American Citizens to own 100% of an Amity company registered in Thailand. Should the aforementioned changes take place it could result in Americans being able to own their small business singularly without any Thai shareholders.

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1st August 2015

In recent weeks there has been a great deal of speculation and confusion surrounding the implementation of an alcohol ban in Thailand. Initially it was reported that a new nationwide ordinance was to come into effect whereby no one would be permitted to sell alcohol near schools in Thailand. It was then reported that such an ordinance had in fact been signed. This placed some business proprietors in Thailand into a state of consternation as the effect of the new rules would have significant impact upon their businesses. Furthermore, there were those who speculated that property owners in the relevant areas might lose real estate value in light of the new regulations.

However, Thai officials apparently reversed their decision at the last minute. Notwitstanding the fact that the proposed ordiance was signed by relevant officials, the text of the newly promulgated regulation was apparently not published in the Royal Thai Gazette and it would seem the proposed regulation has been withdrawn for the time being in order to more thoroughly review the overall policy regarding alcohol consumption and distribution in Thailand.

Meanwhile, it should be noted that from the 30th through the 31st of July, Thailand maintained an effective ban on alcohol pursuant to previously enacted legislation barring alcohol sales during significant Buddhist holidays. Notwithstanding the fact that the regulatory changes noted above were rescinded it remains illegal in Thailand (except under narrow circumstances) to sell alcohol during major Buddhist holidays.

In recent years there has been an upsurge in ordinances regarding alcohol sales. It appears that officials in Thailand are attempting to balance the need to maintain tourism with the conservative outlook of the majority of Thai people, especially on the issue of alcohol consumption. Where the balance will ultimately rest remains to be seen, but it is logical to infer that the alcohol laws in Thailand may be altered in the near future. Such changes seem unlikely to be as stringent as the recently proposed rules, but some form of regulatory change may be on the horizon.

Failure to comply with relevant regulations regarding alcohol sales could result in civil and criminal penalties for individuals and companies in Thailand. As of the time of this writing this blogger has been made aware of numerous anecdotes noting heightened police presence in entertainment areas in an effort to suppress alcohol sales during the Buddhist holidays. Thai authorities take violations of alcohol regulations seriously and this is especially the case during major Buddhist holidays in Thailand. Those establishments violating alcohol regulations could see their Thai alcohol licenses suspended or even rescinded depending upon the circumstances of the situation. Liquor sales in Thailand are often a significant component of a restaurant or entertainment venue’s revenue and therefore complying with relevant regulations could prove vital to such businesses in Thailand.

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12th November 2014

For many the idea of setting up a business in Thailand is desirable if for no other reason than the thought of waking up and going to work every morning in one of the most idyllic countries in the world. In the past, many foreign owned businesses in Thailand were structured in such a way that they avoided some of the more stringent provisions of the Thai Foreign Business Act. In most cases Thai nominee shareholders were used to own the majority of a Thai company thereby ensuring that the company was considered “Thai” for purposes of the Act. However, this practice became illegal pursuant to section 36 of the currently enforced version of the Foreign Business Act as quoted below:

“A Thai national or a juristic person, not being a foreigner under this Act, who assists in or aids and abets or participates in the operation of a foreigner’s business specified in the Lists annexed hereto where such foreigner is not permitted to operate that business or who operates the business jointly with a foreigner in the manner holding it out as the former’s sole business or who acts as a foreigner’s nominee in holding shares in a partnership or a limited company or any juristic person with a view to enabling the foreigner to operate the business in circumvention or violation of the provisions of this Act, or a foreigner who allows such act to be committed by a Thai national or a juristic person that is not a foreigner under this Act, shall be liable to imprisonment for a term not exceeding three years or to a fine of one hundred thousand Baht to one million Baht or to both, and the Court shall order the cessation of the assistance or the aiding and abetting or order the cessation of the joint operation of the business or order the cessation of shareholding or partnership, as the case maybe. In the case of violation of the order of the Court, the violator shall be liable to a fine at the daily rate of ten thousand Baht to fifty thousand Baht throughout the period of the violation.”

Notwithstanding the fact that the use of Thai nominees is illegal, the practice persists. This fact was recently noted in a Bangkok Post article on the topic. However, in some cases discerning whether a company is utilizing nominees or simply structuring itself in such a way so as to provide security to foreign shareholders can be difficult. Therefore, when structuring a company in Thailand it is often prudent to seek the advice of competent legal advisers to in order to ensure that one’s business practices comport with relevant laws and regulations.

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20th August 2014

The Thailand Easy Access Card

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In recent postings on this blog, the issue of immigration crackdowns has been discussed. Specifically, it appears that the so-called in/out 30 day visa run is a thing of the past and those overstaying their lawful immigration status could find themselves barred from reentering the country. Meanwhile, it appears that obtaining one year multiple entry Thai visas is becoming more and more difficult although not impossible where the applicant meets the requirements.

This brings this blogger to a related topic, in the past the Thailand Elite Card program allowed for long term stays in Thailand, but the price was usually not cost effective for the average traveler. It should also be noted that the initial Elite Card scheme allowed for a lifetime visa. Eventually the program went somewhat defunct, only to be re-vamped and reintroduced as a 20 year visa scheme. Those seeking an Elite Card must pay 2 million baht up-front with a yearly 20,000 baht administrative fee. Again, even the current Elite Card cost is not affordable for many. This may be why the Elite Card promoters have implemented a less expensive alternative: The Thailand Easy Access Card. This card allows the holder to obtain what is essentially a 5 year visa rather than a 20 year visa, but the cost is only 500,000 baht up-front as opposed to 2 million, there are other curtailed benefits that come with Thailand Easy Access Card obtainment which are more fully described in a pamphlet issued by the facilitators of the Easy Access card:

As a business traveler who frequently travels to Thailand you truly deserve the exclusive benefits the Thailand Easy Access Membership entitles. Your arrivals will be practically effortless with assistance by our professional Elite Personal Assistants who will be waiting for you at the plane’s door. From your first step into the Kingdom until your departure they will escort and guide you through the airport assisting you with all formalities and immigration procedures. In addition to the exclusive privileges within the airport your private limousine is available to drive you to your destination as quickly and as hassle-free as possible.

Those seeking a detailed breakdown of Easy Access Card benefits are encouraged to click HERE.

Clearly, the Easy Access Card provides benefits besides long term visa status, but for those wishing to remain in the Kingdom of Thailand for a period longer than one year this may be an option. It should be noted that those entering the Kingdom on either an Elite Card or an Easy Access card enter in tourist visa status. Those wishing to enter Thailand based upon marriage should do so on a Thai marriage visa. Retirees may obtain a Thai retirement visa, while those seeking an Education in Thailand should think about the Thai ED visa.

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6th May 2014

In recent articles in the Financial Times the argument has be made that the Peoples’ Republic of China will economically overtake the United States of America in the year 2014. It  should be noted that Chinese economic outpacing of the United States is only measured in terms of statistical purchasing power and little more. In any event, this revealation is significant as it shows the increasing dominance of China in the world economy. The authors of the two articles (which can be found on the Financial Times official website here and here) appear to disagree as to the importance of these developments. The  author of the first article seems rather alarmist about the fact that China will overtake the USA in statistical purchasing power while the second author notes that this should not be viewed as China overtaking the USA in all facets of comparative economics. Furthermore, the second article notes that the United States still remains politically the most powerful nation in the world despite the fact that the world is evolving from a state of unipolarity with the United States as the lone Superpower able to effectively and virtually unilaterally project its power throughout the world, to a state of multipolarity in which many nations have increasing regional (or even global) dominance in certain spheres of economics as well as politics.

The notion that the world is moving toward a state of multipolarity leads this blogger to posit: how will the Association of Southeast Asian Nations (ASEAN) fit into the framework of a multipolar world? It seems reasonable to infer that ASEAN will become an increasingly important economic bloc following the integration of the various member states’ economies under the framework of the ASEAN Economic Community (AEC) which is set to take effect on January 1, 2015. The creation of a single economic platform which will include approximately 400-500 million people, some of the fastest growing economies in the world, and some of the most strategically important geographical locations will likely lead to greater economies of scale for businesses in the region, a larger market for goods and services for the member states, and greater leverage to trade with countries outside of the bloc. However, these issues are not entirely pertinent to the question posited above. The differences between China and an integrated ASEAN economic platform will be substantial. First, some members of ASEAN rank amongst some of the largest economies in the world, in their own right. Meanwhile other economies within the region are still developing. This could lead to a “best of both worlds” scenario for ASEAN, China, and the USA. Case in point, Thailand has seen difficulties in recent years competing with cheaper Chinese labor, but the movements of labor and capital which will come hand-in-hand with ASEAN economic integration could lead to a situation where Thai companies could utilize labor pools in developing ASEAN member countries to offset the low cost of Chinese labor and thereby mitigate previous competitive disadvantages. Furthermore, the United States may find new markets for US goods in an integrated ASEAN and new venues for the manufacture of low cost goods in developing ASEAN nations that would allow for some economic de-coupling from China by the USA, thereby allowing the United States a freer hand in making foreign policy decisions vis-a-vis China. Finally, China stands to gain due to the increase in trade between China and the ASEAN nations which has recently been evidenced by the evolving nature of the geography of the Chinese economy. In recent years, increasing economic activity has been noted in Southern China across the border from Laos, which acts as a kind of entrepot for trade between China and Thailand as well as the Greater ASEAN community. Recent discussions of a high speed rail link connecting China, Laos and Thailand have also been cause for optimism that one day this region could play host to a booming economy which will bring large numbers of people out of poverty and create wealth for the peoples of all nations concerned.

Following ASEAN economic integration, there are likely to be myriad legal challenges for those businesses in ASEAN nations and abroad wishing to gain a foothold in this burgeoning market. The legal challenges posed will likely require the assistance of legal professionals in the region familiar with new ASEAN regulations as well as the internal regulatory frameworks of the various member states.

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12th January 2014

During the early morning hours on Monday January 13th in Bangkok protestors calling for the resignation of the current Thai government commenced their “Operation: Bangkok Shutdown”. It appears from initial reports that 7 key intersections in Bangkok have been blocked including areas near government facilities. Protest leaders have noted their intention to continue the shutdown until the end of January. Should their demands be met, the shutdown may end sooner. The administration of this blog will not comment upon the politics behind these recent developments (leaving that task to news sites and political commentators). However, it is important to note that this situation will likely cause delays in government services, especially those sought in the Bangkok Metropolitan area.

The Thai government has taken measures to deal with the inconvenience this situation may cause. Most notable to foreign nationals in Bangkok was the recent announcement that provisional immigration offices have been established to deal with visa matters for foreign nationals unable to travel to the usual immigration offices located in facilities which are likely to be blocked by the protestors. The Office of the Royal Thai Immigration Police made the following announcement:

ADDITIONAL OFFICES DURING THE DEMONSTRATION SITUATION

Due to the demonstration, please be known that Immigration Services for all foreigners are also provided at ::

1. Immigration Service Center for 3 national Legalized Labors, Major Hollywood Suksawat, 1st Floor,
Suksawat Road, Ratburana, Bangkok.
2. Immigration Service Center for 3 national Legalized Labors, Imperial World Ladprao, 5th Floor,
Ladprao Road, Wang Tong Lang, Bangkok.

This temporary service will be started from January 13rd, 2014 until the better situation. We apologize for inconvenience.

Many foreign nationals remain in the Kingdom of Thailand on long term visas such as business visas, retirement visas, and marriage visas. Those present in the country for periods longer than 90 days are required to check in with immigration officials. Therefore, the current situation could adversely impact those wishing to travel to immigration offices for their quarterly “90 day check-in”. Furthermore, foreign business owners in Bangkok are likely to have issues not only in procuring government services, but also with logistics as a result of the demonstrations.

Hopefully, the situation in Bangkok will be resolved quickly and peacefully. In the meantime, it may be necessary to schedule extra time when traveling throughout the city and foreign nationals are encouraged to stay away from protest areas. The administration of this blog will continue to post updates regarding this situation as developments evolve.

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12th November 2013

It was recently announced that the President of the Tourism Council of Thailand Piyaman Tejapaibul met with Prime Minister Yingluck Shinawatra at Government House on 12 November 2013 in order to discuss matters pertaining to tourism in the Kingdom of Thailand. This recent meeting was held as Bangkok and other areas of Thailand have seen demonstrations which seem to be causing concern for Thai officials. Although many in Thailand feel that the demonstrations should be monitored, they are unlikely to adversely impact the tourism sector so long as the demonstrations remain confined to specific relatively small geographic areas. Over 26 million tourists are expected to travel to Thailand in 2013 and are also expected to bring in revenue well over 1.5 trillion Thai baht to the local economy. This being the case, it  is little wonder that officials in the Thai government as well as the industries which thrive upon tourism related activities are concerned about the possible negative consequences stemming from recent political demonstrations (regardless of affiliation).

The Thai government appears committed to a policy non-violence towards demonstrators as, so long as demonstration remain peaceful, they are not prohibited by law. Meanwhile it currently appears that these demonstrations are confined to only a few areas of the City of Bangkok, namely: Phan Fa Bridge, Makkhawan Bridge on Ratchadamnoen Avenue, and Democracy Monument. At present, increased security measures have been undertaken in these locations as a precautionary measure while traffic police in the city work in earnest to ensure that these activities do not interfere with normal traffic flow in Bangkok. That being stated, some roads and facilities near demonstration sites may be temporarily closed due to demonstrations occurring close by so travelers are advised to research their traffic route prior to traveling in certain parts of the city so as to forestall unnecessary delays.

As of the time of this writing, nearly 20 countries have issued travel warnings to their citizens urging them to try to avoid areas where demonstrations may be taking place. In the recent past, demonstrations have led to significant disruptions in Bangkok as parts of the city were, at one time, virtually impenetrable to ingress and egress. However, under the current circumstances it would appear that such a situation will be unlikely to come about in the near future.

Tourism is a substantial aspect of the Thai economy and it is rather impressive to see government officials as well as civil servants making efforts to see to it that tourism is not affected by recent political activities. Moreover, it would appear that demonstrators are making a conscious effort to keep demonstrations peaceful and confine their activities to certain areas.

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